Indoor agriculture is moving from niche market to the agricultural mainstream, with the global market being valued at $26.8 billion in 2018. As the effects from climate change make it harder to grow profitable crops outdoors while meeting the food demand of a growing population, indoor agriculture offers many benefits in terms of food and economic security.
Yet indoor farming is an energy-hungry practice; high operating costs have restricted indoor farming thus far to high-value markets, and concerns over carbon intensity threaten to hamper the fledgling industry’s growth. Clean energy technologies can unleash indoor farming’s growth by lowering both costs and carbon emissions. Indoor cannabis cultivation is well-positioned to be the first market to widely demonstrate and deploy these technologies.
A key driver for moving agriculture indoors is the climate. Climate change is causing American farmers to face devastating crop losses due to changes in temperature, rainfall, and an increase in extreme weather events.
Growing seasons are already short in much of the country, especially in the agricultural heartland in the Midwest. The American Farm Bureau found that almost 40% of conventional farm income in 2019 was from trade bailouts, disaster insurance, and other indemnities from the farm bill or other insurance policies. While not all hardships can be attributed to climate change, this business model is clearly unsustainable and the promises from indoor farming practices, such as increased crop productivity and revenue, may offer some relief.
While growing food indoors can increase the carbon footprint of agriculture, thoughtful facility design can reduce a myriad of other environmental and social justice concerns. For example, growing food indoors can move production closer to the point of consumption, which has multiple benefits including reduction of transportation costs and fuel, increased produce shelf-life, decreased food waste (a huge contributor to greenhouse gas emissions), and mitigation of food deserts.
Indoor cultivation also uses less water, pesticides, and herbicides than traditional outdoor farming practices, which would significantly reduce polluted runoff into waterways. Equipment to grow crops indoors has become more efficient, decreasing the energy intensity of these facilities but there are still improvements that need to be made to drive the carbon footprint even lower, including a cleaner electricity generation mix.
The high operating costs of indoor agriculture have limited it to high-value markets like cannabis, leafy greens, and herbs — the clean energy industry can help indoor agriculture become a cost-effective and sustainable way to grow more types of crops. Taking a holistic approach to facility design, energy procurement and storage, and source of supplemental carbon dioxide for plant growth can all provide huge environmental and economic benefits. These strategies also mitigate risk for the energy utility servicing the indoor farming facility and should be incentivized by the utility to help facilities recoup investment costs.
Cannabis can catalyze the trend to grow other plants indoors and help bring the costs down to make it economically feasible.
Due to cannabis’ legal status at the federal level, the plants must be grown within the state that has legalized consumption, as crossing state lines with cannabis violates federal law. Many states cannot grow cannabis year-round outside due to their climate, making it difficult to meet the high consumer demand without moving production indoors. Some states have even imposed restrictions requiring cannabis to be grown indoors so that it is out of the public view. These two drivers for indoor cannabis production can make the industry a perfect testbed for innovation, allowing other agricultural practices to be moved indoors in the future.
In more mature markets like Colorado and Oregon, increased supply and competition for legal cannabis has created a glut of product, naturally forcing cannabis cultivators to be more energy efficient to maintain profit margins and stay in business, further driving innovation in equipment and growing practices.
Facilities looking to reduce their energy intensity should start with energy efficiency improvements. Efficiency alone has helped bring operating costs of cannabis cultivation facilities down and increased profit margins. For example, a facility in Oregon calculated an estimated $192,000 in annual energy savings after making some lighting upgrades.
Focusing on efficient building design can maximize sunlight and minimize air leakage, which will reduce energy loads from lighting and HVAC systems. LEDs should be implemented where artificial light is needed to supplement sunlight, and efficient HVAC and dehumidification equipment will be critical to stave off high utility bills; there are resources already available to help cultivation facilities implement these equipment changes.
The proliferation of horticultural LEDs has made the business case for indoor agriculture more attractive and existing agricultural facilities are increasingly participating in energy efficiency programs.
After energy efficiency and building design are considered, it is important to understand the options available for procuring energy and the costs associated with each option.
Most agricultural facilities cannot tolerate prolonged periods without power, so resiliency is also a strong motivator for onsite generation, energy storage, or a full microgrid to supplement energy provided by a utility. If a utility is providing energy, having an additional source of power during times of peak demand can save money on time-of-use energy prices and help avoid high demand charges. Having a suite of options at their disposal will allow agricultural facilities to dispatch different energy resources to maintain reliability while also provide benefits to the grid to help balance the system in critical times.
If a facility is being built in a geographic area with grid constraints, it can be time-intensive and expensive to extend or upgrade that transmission and distribution equipment, which is often paid for by the customer. Energy efficiency and alternative power production can provide additional options to avoid unnecessary infrastructure upgrades. Considering energy efficiency first will allow these other energy resources to be rightsized to the facility while creating potential to add extra capacity to sell excess power back to grid, generating additional value-streams for these resources.
Another important resource that plants need is carbon dioxide.
Often in an indoor environment supplemental carbon dioxide needs to be brought into the facility to help plants thrive and continue to meet or exceed yields seen outdoors. This carbon dioxide is sometimes achieved through combustion of fuel or purchasing manufactured CO2 tanks, both of which can create negative environmental impacts.
There are plenty of industries that produce CO2 as a byproduct of their process, like brewing beer or drilling for oil and natural gas, and that CO2 is usually emitted right into the atmosphere, contributing to increased greenhouse gases. Indoor agriculture facilities should be required to purchase captured CO2, which would create a market for sales of CO2, mitigate greenhouse gas emissions, and create a more circular economy.
One such partnership between a brewery and cannabis company has already begun in Denver; the cannabis company has even forecasted some annual savings from the decreased cost of the new source of CO2, further improving their bottom line. This industry partnership can be a model that others can replicate to be mutually beneficial, especially for industries that are trying to increase sustainability and find ways to reduce greenhouse gas emissions.
Without changing farming practices, we will become more vulnerable to impacts from climate change and could face food security issues. Moving agriculture indoors, however, is cost-prohibitive (without a major reduction in operating costs) for certain crops that have a lower retail price. If the clean energy industry can reduce some of those operating costs, the economics will drive the market to change.
As our local fuel generation mixes become cleaner, the carbon footprint of indoor agriculture will further decrease. States or municipalities that legalized cannabis without creating policies to drive sustainability have seen increased electric load growth — which can negate progress made towards energy efficiency and decarbonization targets — and localized brown outs due to added strain on the grid.
Without early intervention from the clean energy industry to help decarbonize indoor agriculture, the effects could be disastrous, including an increased carbon footprint and added strain on aging electric distribution systems, which would negatively impact utility customers and society.